The Greenhouse and Energy Minimum Standards Bill 2012 implements a commitment by this government and the Council of Australian Governments to achieve nationally consistent regulation of equipment energy efficiency.

I move:

That this bill be now read a second time.

Introduction

The Greenhouse and Energy Minimum Standards Bill 2012 implements a commitment by this government and the Council of Australian Governments to achieve nationally consistent regulation of equipment energy efficiency.

The national framework established by the bill will, for the first time, establish uniform national legislation for energy efficiency. In doing so, it will replace seven overlapping pieces of state legislation and allow future expansion of the Equipment Energy Efficiency Program, commonly known as the E3 program.

Australia's energy efficiency regulation began with energy labelling for household refrigerators and freezers in 1986 in New South Wales followed shortly after by Victoria. In 1992, a national program was established and funded collectively to coordinate energy efficiency regulation across all Australian states and territories. Today, the E3 program now includes New Zealand and covers 23 product types in the residential, commercial and industrial sectors, delivering energy and financial savings to Australian households and businesses. The consistent efforts and contributions of all Australian and New Zealand governments for over two decades makes ours one of the world's longest-running energy efficiency programs.

The E3 program aims to overcome some of the market barriers impeding the development of more energy efficient products. It relies on two main tools: mandatory minimum efficiency levels, and energy rating labels. Minimum efficiency levels help to keep the most inefficient products out of the Australian market. Energy rating labels help Australian consumers and businesses compare upfront costs with costs over time, assisting them to make the best purchasing decisions. These labels also provide an incentive for manufacturers to innovate and produce more energy-efficient products for all Australians. Together these cost-effective measures support two of Australia's most important policy objectives: helping households and businesses to manage energy bills and reduce greenhouse gas emissions.

The E3 program's familiar energy rating label is one of the most well recognised brands in Australia. In 2005, 83 per cent of surveyed consumers reported referring to the label when purchasing major household appliances.

The program is not only popular but delivers real and significant benefits to Australia. In 2010 alone, energy-efficient air conditioners and refrigerators promoted by the E3 program saved Australian households and businesses over $1 billion in electricity costs.

National consistency

Despite the successes of the E3 program, further improvements are possible. Australian governments have coordinated well to achieve energy savings, but over 26 years inconsistencies have arisen across the state based programs. These inconsistencies increase the regulatory burden for businesses and governments alike.

To address these inconsistencies the Council of Australian Governments agreed in 2009 to establish national legislation to regulate energy efficiency. This commitment was recorded in the National Strategy on Energy Efficiency (measure 2.2.2). The agreement reflects the cooperative history of the E3 program, which has benefited from the cooperation and contribution of every Australian jurisdiction for the past 20 years.

The Greenhouse and Energy Minimum Standards Bill 2012 will implement the joint commitment to address the inconsistencies in the E3 program and streamline processes for Australian businesses.

The bill will establish a single national regulator and a single program framework. The new law will replace seven state based legal frameworks. The new national regulator will replace four state based regulators. Obligations, efficiency standards, registration processes and fees will be harmonised.

The national system will improve the regulatory framework while retaining the best of the existing system. Existing efficiency standards and the popular energy rating label will remain unchanged. The national regulator will work cooperatively with state and territory agencies and draw on their expertise. New Zealand, which is a participant in the E3 program, will continue to collaborate on energy efficiency regulation, ensuring the greatest net benefit for both countries.

Expansion

Over the past two decades the E3 program has focused primarily on electrical equipment. The new national framework will allow Australian governments to regulate energy efficiency for a greater range of products.

The expanded E3 program can cover electricity, gas or other energy sources. It can regulate products such as windows and insulation, which affect the energy use of heating and cooling systems. Into the future Australians will benefit from increased energy efficiency across a greater range of products.

Any expansion of the E3 program is of course subject to consultation and rigorous assessment procedures to ensure regulatory action will deliver positive economic benefits, but the bottom line is that more efficient products save energy and that saves Australians money.

Key points on how the bill operates

Under the new framework businesses must register regulated product models with the national regulator. This maintains the practice of the existing E3 program.

Registration allows the national regulator to monitor which products are entering the Australian market. The regulator records registered products on the public energy-efficiency database, which allows the Australian public to research and compare all registered product models to inform purchasing decisions.

Businesses that deal with regulated products must ensure their products meet minimum efficiency standards and carry accurate labels. For the first time, businesses that directly import products for commercial use will also be subject to these obligations. The existing E3 program only targets businesses that supply products in Australia and does not regulate businesses that purchase products overseas. The GEMS bill will end this double standard, closing loopholes in state law that might encourage businesses to purchase products overseas instead of purchasing in Australia.

The bill will establish a range of enforcement options to support these business obligations. It will allow the national regulator to issue infringement notices or ask businesses to compensate consumers for the costs of products that do not comply with regulations. For more serious breaches of the law the bill allows the courts to impose financial penalties. Experience under the current program emphasises the importance of regulators having a range of powers to test products and inspect business premises to ensure a high level of compliance with the act.

The GEMS bill introduces new powers for the national regulator to obtain information needed to administer the E3 program. This includes requirements for registrants to provide information on the number of regulated products sold in Australia each year. These powers are modelled on similar powers already used in the New Zealand energy efficiency program.

Accurate market information will allow the national regulator to identify market areas that may require regulatory intervention to overcome non-price barriers to greater energy efficiency. This information will also allow Australian governments to better coordinate the joint E3 program nationally and with New Zealand.

The Australian government is aware of the potentially sensitive nature of the commercial information and is committed to protecting it. The GEMS bill institutes strict controls on the handling of commercially sensitive information, including criminal offences for government officers who share information without authorisation. The government will support these legal safeguards with a detailed information-handling policy.

Conclusion

The E3 program is an important part of ensuring affordable energy for all Australians and assisting Australia's transition to a low-carbon future.

The benefits are real and significant. By 2020 existing E3 measures are forecast to save Australian households and businesses $5.2 billion per year and reduce household electricity use by 13 per cent per year compared with business as usual. The planned regulatory program is forecast to bring about a further reduction of almost 15 per cent, saving Australian households more than 25 per cent of their yearly power bills.

The Australian government is committed to reducing energy costs for Australian households, to reducing market barriers for Australian businesses and to reducing greenhouse gas emissions for the entire country. The improvements made by the Greenhouse and Energy Minimum Standards Bill will ensure a strong foundation to continue this important work well into the future.